GREYSTONE LOGISTICS INC
For the period ended May 31, 2024. Filed Sep 13, 2024.
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FY2024 · Filed Sep 13, 2024
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Leases
Note 6.** ** ** LEASES
Financing Leases
Financing leases consist of the following as of May 31:
| 2024 | 2023 | |
|---|---|---|
| Non-cancelable financing leases | $23,143 | $60,485 |
| Less: Current portion of financing leases | (19,171) | (31,981) |
| Non-cancelable financing leases, net of current portion | $3,972 | $28,504 |
Greystone and an unrelated private company entered into three lease agreements for certain production equipment with a total cost of approximately $6.9 million which were effective February 24, 2018, August 2, 2018 and December 21, 2018, respectively, with five-year terms and an effective interest rate of 7.40%. Effective October 17, 2022, Greystone and the private company entered into an agreement for Greystone to pay off the leases and acquire the equipment at the unamortized principal balance of the leases for a total of $1,527,293.
Effective December 29, 2022, Greystone exercised its option under a lease agreement dated December 28, 2017, with Yorktown to purchase the production equipment therein for $10,000.
The production equipment under the non-cancelable financing leases as of May 31, 2024 and 2023 was as follows:
| 2024 | 2023 | |
|---|---|---|
| Production equipment under financing leases | $176,565 | $176,565 |
| Less: Accumulated amortization | (119,759) | (95,447) |
| Production equipment under financing leases, net | $56,806 | $81,118 |
Amortization of the carrying amount of the assets was $24,312 and $197,626 for the years ended May 31, 2024 and 2023, respectively. The amortization was included in depreciation expense.
Operating Leases
Greystone has four non-cancellable operating leases for (i) equipment with afifty-two month term and aforty-eight month term and a discount rate of 5.40%, (ii) two buildings on aten year lease with afive year renewal option and a discount rate of 6.00%, and (iii) office space on asix year lease and a discount rate of 8.50%. The leases are single-term with defined constant monthly rental rates.
Effective August 1, 2022, Greystone and GRE entered into a non-cancellableten-year lease agreement with afive-year extension for which Greystone recorded a right-of-use asset and liability based on the present value of the lease payments in the amount of $5,516,006, using a term of one hundred eighty (180) months and a discount rate of 6.00%.
Effective January 1, 2024, Greystone and a related party entered into a non-cancellablesix-year lease agreement with onefive-year extension for which Greystone recorded a right-of-use asset and liability based on the present value of the lease payments in the amount of $354,041, using a term of seventy two (72) months and a discount rate of 8.50%.
The outstanding liability for right to use assets under operating leases as of May 31, 2024 and 2023 is as follows:
| 2024 | 2023 | |
|---|---|---|
| Liability under operating leases | $5,453,234 | $5,360,034 |
| Less: Current portion | (286,221) | (240,346) |
| Long-term portion of liability under operating leases | $5,167,013 | $5,119,688 |
Lease Summary Information
For the years ended May 31, 2024 and 2023, a summary of lease activity follows:
| 2024 | 2023 | |
|---|---|---|
| Lease Expense | ||
| Financing lease expense - | ||
| Amortization of right-of-use assets | $24,312 | $197,626 |
| Interest on lease liabilities | 1,719 | 24,927 |
| Operating lease expense | 609,976 | 501,712 |
| Short-term lease expense | 1,512,438 | 1,532,005 |
| Total | $2,296,978 | $2,256,270 |
| Other Information | ||
| Cash paid for amounts included in the measurement of lease liabilities for finance leases - | ||
| Operating cash flows | $26,031 | $24927 |
| Financing cash flows | $37,342 | $578,151 |
| Cash paid for amounts included in the measurement of lease liabilities for operating leases - | ||
| Operating cash flows | $583,807 | $478,881 |
| Right-of-use assets obtained in exchange for lease liability – operating lease | $354,041 | $5,516,006 |
| Weighted-average remaining lease term (in years) - | ||
| Financing leases | 1.2 | 1.7 |
| Operating leases | 12.7 | 14.1 |
| Weighted-average discount rate - | ||
| Financing leases | 4.0% | 4.4% |
| Operating leases | 6.1% | 6.0% |
Future minimum lease payments under non-cancelable operating and financing leases as of May 31, 2024, are approximately:
| Operating Leases | Financing Leases | |
|---|---|---|
| Year ending May 31, 2025 | $610,291 | $19,171 |
| Year ending May 31, 2026 | 609,000 | 4,514 |
| Year ending May 31, 2027 | 609,000 | - |
| Year ending May 31, 2028 | 631,300 | - |
| Year ending May 31, 2029 | 635,760 | - |
| Thereafter | 4,763,090 | - |
| Total lease payments | 7,858,441 | 23,685 |
| Less: Imputed interest | (2,405,207) | (542) |
| Present value of minimum lease payments | $5,453,234 | $23,143 |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.